11. Regarding the concept of small finance banks (SFB) in India, consider the following statements:
- These banks primarily focus on providing financial inclusion to underserved sections of society.
- These banks can issue credit cards and debit cards for amounts up to 5 Lakh.
- These banks were established under the Reserve Bank of India’s guidelines in 2015.
- Indian citizens with at least 10 years of senior-level experience in banking and finance can individually or jointly apply for SFBs.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] Only three
[D] All four
Show Answer
Correct Answer: C [Only three]
Notes:- These banks primarily focus on providing financial inclusion to underserved sections of society. Correct: They aim to serve the unbanked and underbanked populations.
- These banks can issue credit cards and debit cards for amounts up to 5 Lakh. Incorrect: Small finance banks cannot issue credit cards but they are allowed to issue debit cards.
- These banks were established under the Reserve Bank of India’s guidelines in 2015. Correct: They were introduced to promote financial inclusion.
- Indian citizens with at least 10 years of senior-level experience in banking and finance can individually or jointly apply for SFBs. Correct: Resident individuals/professionals (Indian citizens), singly or jointly, each having at least 10 years of experience in banking and finance at a senior level are eligible for SFBs.
12. In the light of India’s financial reforms, consider the following statements:
- LIC (Life Insurance Corporation of India) is the largest insurance company in India and was established in 1956.
- SEBI (Securities and Exchange Board of India) was established to protect investors and promote the securities market.
- The Reserve Bank of India (RBI) is the central bank of India, responsible for regulating the country’s financial system and issuing currency.
- Public Sector Banks (PSBs) are government-majority-owned banks essential to the Indian economy.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] Only three
[D] All four
Show Answer
Correct Answer: D [All four]
Notes:- LIC (Life Insurance Corporation of India) is the largest insurance company in India and was established in 1956. Correct: LIC (Life Insurance Corporation of India) is the largest insurer in India and was formed by nationalizing over 245 private insurance companies in 1956.
- SEBI (Securities and Exchange Board of India) was established to protect investors and promote the securities market. Correct: SEBI (Securities and Exchange Board of India) was established in 1988, and it became a statutory body in 1992 under the SEBI Act, 1992.
- The Reserve Bank of India (RBI) is the central bank of India, responsible for regulating the country’s financial system and issuing currency. Correct: RBI (Reserve Bank of India) was founded in 1935, it serves as the banker to the government and regulates monetary policy.
- Public Sector Banks (PSBs) are government-majority-owned banks essential to the Indian economy. Correct: Public Sector Banks (PSBs) account for over 70% of the banking sector’s assets in India, crucial for rural and agricultural financing.
13. Regarding cooperative banks in India, consider the following statements:
- The first cooperative bank in India was established in 1904 in Pune.
- Cooperative banks operate under the dual control of the Reserve Bank of India and the respective State Governments.
- All cooperative banks in India are required to maintain a minimum capital adequacy ratio of 9%.
- Cooperative banks primarily serve the agricultural sector and rural areas.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] Only three
[D] All four
Show Answer
Correct Answer: A [Only one]
Notes:- The first cooperative bank in India was established in 1904 in Pune. Incorrect: The first urban cooperative credit society was registered in Canjeevaram (Kanjivaram) in the former Madras province in October, 1904. The first cooperative law of India, the Cooperative Credit Societies Act, was passed on March 25, 1904.
- Cooperative banks operate under the dual control of the Reserve Bank of India and the respective State Governments: Correct as they are regulated by both entities.
- All cooperative banks in India are required to maintain a minimum capital adequacy ratio of 9%. Incorrect: The requirement varies, and many banks have different ratios.
- Cooperative banks primarily serve the agricultural sector and rural areas. Incorrect: They also serve urban areas and various sectors beyond agriculture.
14. What is the theme of Financial Literacy Week (FLW) 2025 launched by Reserve Bank of India?
[A] Financial Inclusion for All
[B] Digital Finance: The Future
[C] Financial Literacy: Women’s Prosperity
[D] Smart Investments for Growth
Show Answer
Correct Answer: C [Financial Literacy: Women’s Prosperity]
Notes:
The Reserve Bank of India (RBI) launched the 10th Financial Literacy Week (FLW) 2025 with the theme “Financial Literacy: Women’s Prosperity.” The event will be observed from February 24 to 28, 2025. RBI Governor Sanjay Malhotra inaugurated the event, emphasizing women’s role in inclusive and sustained economic growth. RBI planned multimedia campaigns to promote financial literacy for women. Banks were encouraged to conduct awareness activities. The initiative aligns with RBI’s goal of financial inclusion and gender equality in economic participation.
15. In the light of banking regulations and deposit insurance, consider the following statements:
- The Deposit Insurance and Credit Guarantee Corporation (DICGC) was established in 1961.
- The DICGC insures deposits in all types of banks, including regional rural banks.
- The insurance coverage per depositor per bank is ₹1 lakh.
- The DICGC is a subsidiary of the Reserve Bank of India (RBI).
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] Only three
[D] All four
Show Answer
Correct Answer: B [Only two]
Notes:- The Deposit Insurance and Credit Guarantee Corporation (DICGC) was established in 1961: This is correct. The DICGC was established to provide deposit insurance to depositors in Indian banks.
- The DICGC insures deposits in all types of banks, including regional rural banks: This is correct. The DICGC covers commercial banks, cooperative banks, and regional rural banks.
- The insurance coverage per depositor per bank is ₹1 lakh: This is incorrect. The current insurance coverage is ₹5 lakh per depositor per bank.
- The DICGC is a subsidiary of the Reserve Bank of India (RBI): This is incorrect. The DICGC is not a subsidiary but operates under the RBI.
16. With reference to the Reserve Bank of India (RBI), consider the following statements:
- The RBI was established in 1935 to respond to economic troubles after the First World War.
- The RBI is responsible for the issuance of all currency notes in India.
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: A [Only 1]
Notes:- The RBI was established in 1935 to respond to economic troubles after the First World War. Correct: The Reserve Bank of India was established in 1935 primarily to respond to the economic challenges faced in the wake of the First World War and to manage the monetary policy of the country.
- The RBI is responsible for the issuance of all currency notes in India. Incorrect: The Reserve Bank of India (RBI) doesn’t issue all currency notes in India. The Ministry of Finance issues the ₹1 note.
17. With reference to the Standing Deposit Facility (SDF), consider the following statements:
- The SDF was introduced by the Reserve Bank of India to absorb liquidity without providing government securities.
- The SDF replaced the reverse repo as a floor for the liquidity adjustment facility corridor.
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: C [Both 1 & 2]
Notes:- The SDF was introduced by the Reserve Bank of India to absorb liquidity without providing government securities. Correct: The Standing Deposit Facility was introduced by the Reserve Bank of India to absorb excess liquidity from commercial banks without the need to provide government securities in return, making it a collateral-free arrangement.
- The SDF replaced the reverse repo as a floor for the liquidity adjustment facility corridor. Correct: The SDF replaced the reverse repo as the floor for the liquidity adjustment facility corridor in 2022, allowing the RBI to manage liquidity more effectively during periods of surplus.
18. With respect to the Reserve Bank of India (RBI), which of the following observations is/are correct?
- The RBI conducts dollar/rupee swaps only to stabilize the currency.
- The RBI’s dollar/rupee swap operations are always conducted at a fixed exchange rate.
Select the correct option from the codes given below:
[A] Only 1
[B] Only 2
[C] Both 1 & 2
[D] Neither 1 nor 2
Show Answer
Correct Answer: D [Neither 1 nor 2]
Notes:- Dollar/Rupee Swaps (Incorrect): The RBI conducts dollar/rupee swaps for various reasons, including injecting liquidity, not solely for stabilization.
- Fixed Exchange Rate (Incorrect): The RBI’s swap operations are not conducted at a fixed exchange rate; they involve market-driven rates adjusted according to forward rates.
19. In the light of recent developments in financial regulations, consider the following statements:
- The Reserve Bank of India can supersede the board of any Non-Banking Financial Company (NBFC) under the Reserve Bank of India Act, 1934.
- The Insolvency and Bankruptcy Code applies to both individuals and companies, allowing for resolution and liquidation processes.
- The National Company Law Tribunal (NCLT) is responsible for adjudicating insolvency cases in India.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: C [All three]
Notes:- The Reserve Bank of India can supersede the board of any Non-Banking Financial Company (NBFC) under the Reserve Bank of India Act, 1934: This is correct. The RBI has the authority to intervene in the governance of NBFCs to ensure compliance and protect stakeholders.
- The Insolvency and Bankruptcy Code applies to both individuals and companies, allowing for resolution and liquidation processes: This is correct. The code provides a framework for resolving insolvency for both types of entities.
- The National Company Law Tribunal (NCLT) is responsible for adjudicating insolvency cases in India: This is correct. The NCLT has jurisdiction over insolvency and bankruptcy proceedings under the code.
Thus, all three statements are correct.
20. With reference to the liquidity measures announced by the Reserve Bank of India (RBI), consider the following statements:
- The RBI has conducted USD/INR Buy/Sell Swap auctions to manage liquidity in the banking system.
- A Variable Rate Repo (VRR) auction can be conducted for a maximum of 28 days.
- Open Market Operations (OMO) involve the buying and selling of government securities by the RBI.
How many of the above statements are correct?
[A] Only one
[B] Only two
[C] All three
[D] None
Show Answer
Correct Answer: B [Only two]
Notes:- The RBI has conducted USD/INR Buy/Sell Swap auctions to manage liquidity in the banking system.(Correct): The RBI conducts these auctions to provide liquidity in the banking system by allowing banks to sell US dollars and receive rupee funds, thus managing currency and liquidity effectively. The last swap auction was for $5 billion for three years.
- A Variable Rate Repo (VRR) auction can be conducted for a maximum of 28 days: This is incorrect. VRR auctions can be conducted for varying tenors, including longer durations.
- Open Market Operations (OMO) involve the buying and selling of government securities by the RBI: This is correct. OMO is a tool used to manage liquidity in the economy.
Thus, only two of the statements are correct.
